Settl, LJ Hooker's DIY hybrid property sales platform to take on disruptors

Settl, LJ Hooker's DIY hybrid property sales platform to take on disruptors
Settl, LJ Hooker's DIY hybrid property sales platform to take on disruptors

LJ Hooker’s intended DIY property selling platform Settl, while launching the 88-year-old company into a new tech era, is already having a disruptive internal impact before it starts, with fears there will be undercutting of the commissions of its loyal sales agents.

The yet to be launched online Settl platform, which had been timed to commence in the second quarter of 2017, but seems delayed, or even on the back burner, will encourage vendors to sell their homes by themselves for a low fixed fee, in an response to property disruptors such as Purplebricks and buyMyplace.com.au.

Property Observer gleans it will on launch adopt the logo "Pay less, Settle for more."

Purplebricks, buyMyplace and forsalebyowner are all slowly growing their share of the Australian property market due to their low-cost, fixed-fee model.

Settl will include the pricing option of assistance of a Settl estate agent if the vendor wishes to have assistance with open-for-inspections and auctions. 

LJ Hooker’s Settl will be run as a stand-alone entity although seemingly directed by the network's current leadership team who have faced franchisees who've threatened to depart.

Settl has been in research and development by LJX-Lab for the past 20 months.

Settl is led by an expert tech-startup team including players from pioneering tech-giants Uber, Atlassian, Freelancer and Airtasker.

Headhunters Mitchelake have closed applications to find its chief executive who has been tasked with leading "an aggressive business/market development strategy in Australia."

A landing page, while unconfirmed, suggests it is a "smart, nimbler real estate service."

The hybrid model will be scaled up in partnership with LJ Hooker’s own network to cater to the new consumer.

Settl is part of LJ Hooker’s $100 million digital transformation. 

The real estate agency, founded by Sir Leslie Hooker in 1928 and still part owned by grandson Janusz Hooker, is in the midst of a transformation. Earlier this year LJ Hooker's CEO Grant Harrod unexpectedly resigned after the company scrapped plans to list on the ASX.

The most recent development has been that of former Aussie Home Loans CEO Stephen Porges joining in an advisory role, although market chatter points to him becoming the next chief executive following the departure of Harrod.

Earlier this year, LJ Hooker scrapped its IPO as real estate franchise businesses came under pressure from a deterioration in property listings and the threat of technologies.

Chairman Janusz Hooker has likened the launch of Settl to when Qantas created low-cost carrier Jetstar to service a different market segment.

"These will be two brands – LJ Hooker and Settl – serving two distinct customers," Hooker told The Australian Financial Review recently.

Hooker said Settl would cater to the needs of millennials and "digital natives" who wanted to "pay less and do more themselves".

But the traditional, commission-based model is not going anywhere, he stressed. Usually, commissions vary from 1.5 percent to 2.5 percent of the selling price.

"Part of the market still wants to fly Qantas, but there's a new market that wants to fly Jetstar. We're creating a new market – it's not a zero sum game. The launch of hybrid real estate businesses has increased the size of the market," he said.

Pricing for Settl has not yet been revealed, but is expected to be competitive compared with other DIY platforms.

L Janusz Hooker said Australia is on the cusp of a wave of property innovation.

“We have been closely monitoring global trends for several years, and have seen new models gain momentum in overseas markets like the UK.

"Settl will open up this new market in Australia, giving digital-natives the choice and control they want,” he said. 

"In Australia, this segment is estimated to only be a few percent of today’s market, however it could grow up to 10 percent by 2025."

Mr Hooker commented that Australia was a unique market with its own distinct circumstances - "and we’ve seen time and time again that standardised overseas models are not overly successful here." 

“We see the ongoing human value added from agents a critical part of real estate services into the future. To ensure customer satisfaction, Settl’s unique hybrid “online to offline” model aligns the agent 100 percent with the vendor’s result.”

Josh Rowe, CEO of property price prediction app realAs.com, has welcomed the new LJ Hooker venture.

"A company that is not prepared to cannibalise their own business to meet customers' changing needs will eventually fail," Rowe told the AFR.

"Netflix was originally a DVD mail order business with 20 million users at its peak. Now as a streaming service it has 99 million users," he said.

"Perhaps LJ Hooker is the Netflix of real estate in Australia."

Graeme Hyde and Bryan Weir are heading the venture, with oversight by Esther Selvanayagam, the financial chief since February 2017. 

Hyde is the exisiting network chief having joined the real estate industry in 1995 after 15 years in television and radio. He joined the LJ Hooker network in 2001 when he took over the LJ Hooker office in Port Macquarie and was inducted into the Captains Club in his second year with the network and Multimillion Dollar Chapter in his third year. 

Bryan Weir joined the board of LJ Hooker in 2014 after 35 years of corporate and business experience including time at Freeholds and Macquarie Bank.

Weir is keenly involved in the sport of rowing, being the President of Mosman Rowing Club from 2004 until 2009.

Earlier this month they watched as their Mosman-based LJ Hooker Lower North Shore group joined the Ray White network in a shock defection.

LJ Hooker Lower North Shore has been operating for 60 years and employs more than 50 people.

It has been run by the same directors for the last 20 years.

LJ Hooker Lower North Shore directors Richard Harding, Geoff Smith and Bernard Ryan are to undertake the re-brand, seeing the potential for expansion across the region from their already large footprint. Since Property Observer previously reported LJ Hooker agents jumping ship to Ray White, LJH has advertised in print publications for their replacement.

Agents across the group and industry have expressed concern at the LJH Settl initiative saying "flat fees aren't the answer."

"We have an over supply of agents, and the value is being lost as a seller when agents operate just as a tour guide at the opens.

"Agents should be looked at as an investment in the sale," one agent said adding Settl "just creates more opportunity for crappy agents."

 

Jonathan Chancellor

Jonathan Chancellor

Jonathan Chancellor is one of our authors. Jonathan has been writing about property since the early 1980s and is editor-at-large of Property Observer.

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Lj Hooker Property Disruptor

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